Q8SE - Horngren'S Financial And Managerial Accounting

Question

A partial worksheet for Aaron Adjusters is presented below. Solve for the missing information. J K L M 33 34 35 \( 61,400 (g) (d) \) 22,400 (b) (e) (a) (f) Debit Credit Debit Credit Income Statement Balance Sheet Net (c) Total $ 61,400.

Step-by-Step Solution

Answer

(a) $17,100

(b) $56,100

(c) Loss

(d) $5,300

(e) $22,400

(f) $22,400  

(g) $61,400

Step 1: Explanation on (a)

Total credit in income statement is calculated as follows:

$\begin{array}{c}\mathbf{Total}\mathbf{ }\mathbf{Credit}\mathbf{=}\mathbf{Total}\mathbf{ }\mathbf{Debit}-\mathbf{Net}\mathbf{ }\mathbf{Loss}\\ \mathbf{=}\mathbf{\$}\mathbf{22}\mathbf{,}\mathbf{400}-\mathbf{\$}\mathbf{5}\mathbf{,}\mathbf{300}\\ \mathbf{=}\mathbf{\$}\mathbf{17}\mathbf{,}\mathbf{100}\end{array}$

Step 2: Explanation on (c)

In the income statement, total credits (revenues) are lower than total debits (expenses), hence it will result in net loss. 

Step 3: Explanation on (d)

Net loss is transferred to the retained earnings, hence in the worksheet it will be posted under debit side under balance sheet section. 

Step 4: Explanation on (e)

In the income statement, total debit balance will remain the same as $22,400,  as there will be no adjustment in this side.  

Step 5: Explanation on (f)

In the income statement, total credit balance will be equal to the total debit balance which is $22,400. 

Step 6: Explanation on (g)

In the balance sheet, total debit balance will be equal to the total credit balance which is $61,400. 

Step 7: Explanation on (b)

Total debit without net loss is calculated as follows: 

$\begin{array}{c}\mathbf{Total}\mathbf{ }\mathbf{Debits}\mathbf{ }\mathbf{Without}\mathbf{ }\mathbf{Net}\mathbf{ }\mathbf{Loss}\mathbf{=}\mathbf{Total}\mathbf{ }\mathbf{Debit}-\mathbf{Net}\mathbf{ }\mathbf{Loss}\\ \mathbf{=}\mathbf{\$}\mathbf{61}\mathbf{,}\mathbf{400}-\mathbf{\$}\mathbf{5}\mathbf{,}\mathbf{300}\\ \mathbf{=}\mathbf{\$}\mathbf{56}\mathbf{,}\mathbf{100}\end{array}$